7 Directors Resign at Baldwin-United
The seven independent directors of the financially troubled Baldwin-United Corp. resigned Thursday and three new directors were nominated.
“They decided it was best for the company,” said Washington lawyer Thomas Cullen, who represents the seven directors.
Cullen insisted that there were no problems with the present management. “This is no purge. The directors just met and decided it was best for the company to step down at this time,” he said.
Cullen noted that a federal lawsuit alleging that the board misled stock-market investors about Baldwin-United’s financial condition has been filed. Cullen also said that the directors were responding to a recent report by Bankruptcy Court examiner David Greer, which said “causes exist” for Baldwin-United to consider legal action against former Baldwin-United President Morley P. Thompson and those who served on the company’s board in late 1981.
“What the company doesn’t need now is a board of directors vindicating themselves” while the company is trying to trying to turn itself around, said Cullen.
The board members, who have been under fire since the company filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in 1983, maintain that they acted properly before and since financial problems began at the Cincinnati-based financial-services and insurance conglomerate.
The directors who resigned were Seagram Distilleries President Phil Beekman, Lucian and Eugene Wulsin, Harold Smith, John Kidde, Anthony Dechant and Sherman Munson.
Meanwhile, Baldwin-United Chairman Victor Palmieri and President Peter Martosella, the remaining board members, have nominated three men to be directors.
They are Frank E. Loy, president of the German Marshall Fund of the United States, Washington; Peter W. Mullin, president of Management Compensation Group, Los Angeles, and Anthony Frank, chairman of First Nationwide Financial Corp., San Francisco.
“David (Greer) never talked to any of us when he made that report,” said Cullen. “We intend to answer that report soon.”
The outgoing board brought in Palmieri and Martosella, who are experts in salvaging financially troubled companies, to replace Thompson.
The company asked for bankruptcy protection from creditors while it began selling assets to pay more than $1 billion in debts. Its six insurance companies are being operated by state regulating agencies in Arkansas and Indiana.
Palmieri said this week that he believed that it would take “a miracle” to keep Baldwin-United as an operating company once the debts have been repaid.
